Instruction 22.1: Use the Information to Answer Following Question(s)

Instruction 22.1:
Use the information to answer following question(s) .
SureDrip Irrigation Systems Inc. is supplied with plastic chips for their plastic injection molding manufacturing process. Their supplier, Sun Chemical, Inc. offers financing terms of a 2% discount if the accounts payable are paid in 10 days or less with the full balance due in 45 days. Short-term financing available to SureDrip is available at an annual rate of 9.6%. SureDrip has just purchased $400,000 of plastic chips from Sun Chemical.
-Refer to Instruction 22.1. What is the amount of money SureDrip will save on accounts payable if they accept the discount?

A) $400,000
B) $8,000
C) $33,333
D) $20,000

Correct Answer:

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